Belfast Telegraph

Friday 22 August 2014

Papers reveal Arab-funded bank plan

Charles Haughey

The Government examined plans for a bank funded by Arab investors to channel substantial sums of money into Ireland.

Taoiseach Charles Haughey and then foreign minister Brian Lenihan were briefed on the finance scheme in late 1980.

Dr Omar Al-Hassan, Ambassador to the Arab League in London at the time, was using a proposal drafted by an Irish Senator for talks with potential Middle East investors.

According to previously unreleased letters from the Taoiseach's office in November that year, the plan was to get the bank up and running with small sums of cash, tightly managed, before expanding. It envisaged having £9 million - 37 million euro in today's money - in deposits after three years and securing £43 million - worth about 178 million euro today - in loans from Arab financiers and investors.

The aim was to provide a pot of money to satisfy Government borrowing or alternatively create a well-funded independent body to finance and construct infrastructure projects in roads, water, hospitals, housing and schools and then lease them back to relevant government departments.

Senator Noel Mulcahy wrote to the Taoiseach to detail the plan and the contacts he had made with potential Arab investors.

"I had a preliminary chat with Bernard Breen of the Central Bank just to feel the temperature!" he said. "Although you may think that the volume of the activity projected is too small, I feel that we should get off the ground with something which can be managed fairly tightly and be open to bigger developments later."

The Senator warned that promoters should have their minds made up as to the structure and operation of the bank before going to the Central Bank for authorisation. No ifs or buts, he warned. He said the Central Bank would not want to issue a new banking licence but would prefer to see investors buy an existing bank.

"In the heel of the hunt however, they cannot reasonably refuse as long as the application is properly presented and prepared," he said. "The ace in our hand is the fact that the bank is being used to attract new investment funds into the home market."

Names for the new institution ranged from Iro-Arabian Development to the Arabian-Irish Investment Bank. Two-thirds of shareholders would be Arabian individuals, 26% Irish institutions and 8% Irish individuals, the plan predicted. It envisaged having 20 staff after two years in business and bringing over Arab graduates to work in the bank.

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